The law does not stop anybody from boycotting anything. Its aim is to stop people for calling for a boycott of Israel. There is a booming business for some unscrupulous Israeli citizens to join Boycott-Divest-Sanction movement. Given their citizenship status it provides the legitimacy to the movement. Now they can be hit where it hurts - the wallet. The moral - if you don't like Israel, go elsewhere.
Dozens protest in Shfaram against budget cuts targeting Christian schools (Haaretz)
from the article: Israel's boycott law: The quiet sound of going fascist